Trang
08-01-2008, 11:01 AM
By JOHN HECHINGER
January 8, 2008
Yale University said it will increase the amount it spends annually from its endowment next school year by 37%, to $1.15 billion, to boost financial aid, expand scientific research and take on other initiatives.
After Yale's announcement, Harvard University said it plans to boost spending from its $35 billion endowment next year to 5% from its current 4.3%.
The moves will each add hundreds of millions of dollars to the Ivy League rivals' budgets. They come at a time of pressure from Congress and other quarters for wealthy schools to make tuition more affordable as they stockpile billions from donations and investment gains. Sixty-two colleges had endowments exceeding $1 billion, according to a survey last year by the National Association of College and University Business Officers.
In recent years, Yale, like some other elite colleges, has spent less than 4% of its endowment annually, raising concerns about hoarding. The expected $1.15 billion payout -- $307 million more than its spending this year -- amounts to about 5% of its $22.5 billion endowment.
The Yale initiative comes a month after Harvard said it will expand financial aid for middle- and upper-middle-class families. Policy makers and analysts said the moves by the universities, whose endowments are the largest in higher education, will put pressure on other colleges to follow suit or lose out in the intense competition for top students.
Along with gathering hefty donations each year, both schools have boasted stellar investment gains. Yale's endowment has roughly doubled in size since 2003. Yale President Richard C. Levin said the school had been considering an increase in spending out of its endowment, but both the congressional concern about low payouts and Harvard's announcement had an impact on Yale's timing.
Yale, of New Haven, Conn., released no specifics about how it is improving financial aid, saying it expected to make an announcement later this month. But Mr. Levin said it will be "competitive" with Harvard. "I don't think once we've made these changes, any student will choose Harvard over Yale based on cost." Under Harvard's program, undergraduates whose families earn as much as $180,000 a year would be asked to pay 10% or less of their incomes annually for the cost of Harvard, which now totals $45,620.
Asked whether Yale, like Harvard and many other schools, would stop including loans as part of financial-aid packages, Mr. Levin replied: "Wait until next week." In what it said was another effort to improve access, Yale said it is "actively considering" the expansion of its undergraduate student body to about 6,000 from 5,300. A decision is expected this summer.
Princeton University in New Jersey has also been expanding its enrollment. The school is credited with spurring others to drop loans from financial-aid packages, with its move to do so in 2001. Stanford President John Hennessy this past fall also raised the idea of a bigger freshman class.
Charles Grassley, the senior Republican on the Senate Finance Committee, has been pushing to require schools to spend a minimum amount of their endowments each year. Foundations are required to spend 5%, while many universities fall below that threshold.
Mr. Grassley praised Yale's move, calling it "a great day for parents and students." He noted that Yale's and Harvard's announcements came after a hearing in September that focused on the size on college endowments. "It's a big deal that the two wealthiest colleges are making tuition more affordable," he said. "They set an example for all other well-funded schools to do the same."
Mr. Levin, while praising Sen. Grassley for bringing attention to the low spending rates of many universities, said he opposed any legislation requiring a minimum payout. "We think that's a matter best left in the hands of universities," Mr. Levin said.
Write to John Hechinger at john.hechinger@wsj.com
January 8, 2008
Yale University said it will increase the amount it spends annually from its endowment next school year by 37%, to $1.15 billion, to boost financial aid, expand scientific research and take on other initiatives.
After Yale's announcement, Harvard University said it plans to boost spending from its $35 billion endowment next year to 5% from its current 4.3%.
The moves will each add hundreds of millions of dollars to the Ivy League rivals' budgets. They come at a time of pressure from Congress and other quarters for wealthy schools to make tuition more affordable as they stockpile billions from donations and investment gains. Sixty-two colleges had endowments exceeding $1 billion, according to a survey last year by the National Association of College and University Business Officers.
In recent years, Yale, like some other elite colleges, has spent less than 4% of its endowment annually, raising concerns about hoarding. The expected $1.15 billion payout -- $307 million more than its spending this year -- amounts to about 5% of its $22.5 billion endowment.
The Yale initiative comes a month after Harvard said it will expand financial aid for middle- and upper-middle-class families. Policy makers and analysts said the moves by the universities, whose endowments are the largest in higher education, will put pressure on other colleges to follow suit or lose out in the intense competition for top students.
Along with gathering hefty donations each year, both schools have boasted stellar investment gains. Yale's endowment has roughly doubled in size since 2003. Yale President Richard C. Levin said the school had been considering an increase in spending out of its endowment, but both the congressional concern about low payouts and Harvard's announcement had an impact on Yale's timing.
Yale, of New Haven, Conn., released no specifics about how it is improving financial aid, saying it expected to make an announcement later this month. But Mr. Levin said it will be "competitive" with Harvard. "I don't think once we've made these changes, any student will choose Harvard over Yale based on cost." Under Harvard's program, undergraduates whose families earn as much as $180,000 a year would be asked to pay 10% or less of their incomes annually for the cost of Harvard, which now totals $45,620.
Asked whether Yale, like Harvard and many other schools, would stop including loans as part of financial-aid packages, Mr. Levin replied: "Wait until next week." In what it said was another effort to improve access, Yale said it is "actively considering" the expansion of its undergraduate student body to about 6,000 from 5,300. A decision is expected this summer.
Princeton University in New Jersey has also been expanding its enrollment. The school is credited with spurring others to drop loans from financial-aid packages, with its move to do so in 2001. Stanford President John Hennessy this past fall also raised the idea of a bigger freshman class.
Charles Grassley, the senior Republican on the Senate Finance Committee, has been pushing to require schools to spend a minimum amount of their endowments each year. Foundations are required to spend 5%, while many universities fall below that threshold.
Mr. Grassley praised Yale's move, calling it "a great day for parents and students." He noted that Yale's and Harvard's announcements came after a hearing in September that focused on the size on college endowments. "It's a big deal that the two wealthiest colleges are making tuition more affordable," he said. "They set an example for all other well-funded schools to do the same."
Mr. Levin, while praising Sen. Grassley for bringing attention to the low spending rates of many universities, said he opposed any legislation requiring a minimum payout. "We think that's a matter best left in the hands of universities," Mr. Levin said.
Write to John Hechinger at john.hechinger@wsj.com